DJIA, S&P 500 now under same company
BY DAVID ROEDER Business Reporter firstname.lastname@example.org July 2, 2012 11:30AM
Updated: August 4, 2012 6:18AM
The two most common barometers of the U.S. stock market, the Dow Jones industrial average and the Standard & Poor’s 500 index, are now under the same ownership.
Chicago exchange operator CME Group Inc., which owns the Dow business, and McGraw-Hill Cos. said Monday they are combining the stock indexes under a joint venture called S&P Dow Jones Indices.
McGraw-Hill owns the S&P segment and will control 73 percent of the joint venture. CME said it will control 24.4 percent and Dow Jones & Co., part of News Corp., will have the rest.
The arrangement calls for CME to pay the joint venture a share of its profits from futures trading in its S&P contracts. The companies also said CME’s exclusive right to list S&P-related contracts was extended, but terms were not given.
The new business publishes indexes for 575 exchange-traded funds. The companies said it had $421 million in revenue last year.
Among its products that are widely used by fund managers are the S&P/Case-Shiller home price indexes and the S&P GSC and Dow Jones-UBS commodity indexes.
Terry Duffy, executive chairman of CME Group, said the deal “will create new risk management index products and trading opportunities for both our institutional and retail customers around the world. In addition, this transaction diversifies CME Group’s revenue base and creates value for our shareholders.”
CME owns the Chicago Mercantile Exchange and the Chicago Board of Trade.
In another aspect of the deal, CME sold a London-based company that provides data on credit-default swaps prices to S&P Capital IQ, a data business of McGraw-Hill.